The concept of home loan modification is nothing new, and consultants such as the Golden State Financial Group have worked with them for many years. Yet, it wasn’t until the Obama Administration of 2009 that people started to really get to know about these programs, and it wasn’t until recently that the concept has become somewhat of a household name. The problem is, however, that there is still a lot of misinformation out there about home loan modifications. Golden State Financial Group has taken it upon themselves to address some of those myths, therefore.
Golden State Financial Group on Loan Modification Myths
Myth #1 – You can only have a loan modification if you are already late on your payments.
This is untrue. You can apply for a loan modification before you default. In fact, if you know that you are approaching default, then the lender would appreciate it if you contacted them straight away to look into the possibilities of a modification. Doing so before you default also means you protect your credit score a lot more.
Myth #2 – Lenders prefer foreclosure over modification.
Again, this is completely untrue. Foreclosing on a property costs a lender a lot of money. It also means that they start to build up a housing stock, as it can take a long time before properties are sold. This is particularly true with foreclosed properties, which are often in a poor condition. Lenders would much prefer avoiding all of this by coming to some sort of alternative agreement with you. Since President Obama’s Making Home Affordable plan, this has become even truer.
Myth #3 – My credit rating will plummet after loan modification.
A modification will be visible on your credit file, and it will impact it to some degree. However, if you haven’t yet defaulted on your loan, the impact of a modification is minimal. Additionally, not getting a loan modification and ending up in foreclosure will have a far more serious effect on your credit rating.
Myth #4 – It is really easy to get a loan modification.
Unfortunately, lenders would prefer it if you simply made your payments as per your agreement. Hence, obtaining a loan modification can be quite complex. So much so, in fact, that it is better to work with a professional like Golden State Financial Group, who know all the right things to say.
Myth #5 – If you have received your foreclosure notice, you can no longer apply for a loan modification.
You can apply for a loan modification at any point. Lenders don’t want to foreclose on your property, not even if they have sent you the notice out. It is costly, it is risky, and it leaves them with assets they don’t want and that are probably worth less than the money owed. You can literally apply for a loan modification when you need help with your finances up to the point where the bailiffs are at your door ready to evict you, so it is almost never too late.
